OCR A Level Economics
OCR A Level Economics Economic Policy Objectives Exam Questions
Free OCR A Level Economics exam questions for Economic Policy Objectives, with a mark scheme for every pack. Covers economic growth, inflation, unemployment, the balance of payments, measures of performance, indicators and conflicts between objectives.
Economic Policy Objectives exam questions
1 question pack of real past exam questions, each with its mark scheme. Do not stop after a few: answer as many as you can without notes, then mark every answer with the mark scheme. The more questions you do, the more quickly you will spot how examiners ask about each idea.
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A-Level Economics Flashcards for 2027 Onwards
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About OCR A Level Economics Economic Policy Objectives
Economic Policy Objectives introduces the Macroeconomics part of OCR A Level Economics. You study the main macroeconomic objectives of governments: economic growth, low and stable inflation, low unemployment and a sustainable balance of payments, together with others such as a fair distribution of income and environmental sustainability. You learn how each is measured, its causes and consequences, and the trade-offs that can arise between them. The topic links directly to AD/AS analysis and to policy implementation. Examiners expect you to read and interpret macroeconomic data accurately and to evaluate which objectives should take priority in different circumstances.
What you need to know
- Economic growth Measured by the percentage change in real GDP. Distinguish actual and potential growth, short-run and long-run growth, and output gaps.
- Inflation A sustained rise in the general price level measured by the Consumer Prices Index. The UK government sets the Bank of England an inflation target of 2%. Causes are demand-pull and cost-push; consequences include reduced purchasing power and competitiveness.
- Unemployment Measured by the Labour Force Survey (ILO) and the claimant count. Types: frictional, structural, cyclical (demand-deficient) and seasonal; causes and consequences for individuals and the economy.
- Balance of payments Current account components (trade in goods and services, primary and secondary income). Causes and consequences of deficits and surpluses.
- Other objectives Environmental sustainability, a fairer distribution of income and fiscal balance.
- Conflicts and trade-offs Growth versus inflation, unemployment versus inflation (the short-run Phillips curve), growth versus the current account, and growth versus environmental sustainability.
Common mistakes in Economic Policy Objectives
- Confusing a fall in inflation with falling prices. Lower inflation means prices are rising more slowly.
- Using nominal GDP growth as real growth. Adjust for inflation.
- Mixing up types of unemployment. Structural unemployment comes from changes in industry and skills; cyclical comes from a lack of demand.
- Assuming a current account deficit is unsustainable in every case. Consider its size, how it is financed and its cause.
- Describing conflicts without a mechanism. Explain why, for example, rapid AD growth raises imports and worsens the current account.
Try three Economic Policy Objectives exam-style questions
1. Nominal GDP grows by 5.2% in a year while inflation is 3.0%. Calculate the approximate rate of real economic growth. (1 mark)
Show the mark scheme answer
Approximately 5.2 - 3.0 = 2.2%.
2. Explain two consequences of high unemployment for the economy. (4 marks)
Show the mark scheme answer
Lost output, so the economy is inside its PPC; lower tax revenue and higher benefit spending worsen the government's finances; social costs such as poverty and crime; loss of skills (hysteresis); two consequences developed.
3. Evaluate whether low inflation should be the main macroeconomic objective of the government. (12 marks)
Show the mark scheme answer
Low and stable inflation creates certainty for investment, protects purchasing power and competitiveness; evaluation: in a recession unemployment and growth may be more pressing; trade-off through the Phillips curve; excessive focus on inflation may cause deflation risk; priorities change with circumstances; supported judgement.
Economic Policy Objectives FAQs
What does OCR A Level Economics Economic Policy Objectives cover?
It covers economic growth, inflation, unemployment and the balance of payments, other objectives such as income distribution and sustainability, and conflicts between objectives.
Which paper is Economic Policy Objectives examined in?
It is examined in Paper 2, Macroeconomics (H460/02) and can also appear in Paper 3, Themes in Economics.
How should I tackle data questions on macroeconomic objectives?
Read the units and time periods carefully, distinguish rates from levels, quote specific figures, and describe trends before explaining them.
